Ukraine is not Russia. What is the default of Ukraine's debt differs from the default of the Russian Federation

In 2022, after the beginning of the aggression of the Russian Federation against Ukraine, the expansions in the book published in 2004 became even more obvious, and this applies, in particular, to economic and financial policy. At the end of June, Moody's confirmed Russia's default on sovereign debt. In August, there was a report from international rating agencies that the default occurred in the debt of Ukraine.

However, despite the same term, both defaults have significant differences that affect the present and future economies of the countries. Focus found out the details and learned from experts, which means a default rating for Ukraine. The lack of funds in the state budget for many state expenditures forced the government to initiate a dialogue with investors - owners of Ukrainian securities - on the transfer of terms of settlement for two years.

Finance Minister Serhiy Marchenko in July stated that deferral of debt service payments and varants in the next 2 years allows the saved $ 5 billion for urgent needs: social protection and financial support for servicemen. At the same time, experts surveyed by focus said that the decision to ask for a deferral is optimal in a situation where countries have increased dramatically in connection with war, and economic activity decreased, which affects the fall in revenues of the state budget.

The start of the public debt management is dated July 20, and on August 10, the Ministry of Finance reported that the operation was completed - the conditions of issues of all bonds of external government loans and state derivatives of Ukraine, as well as Eurobonds guaranteed by the state, were changed. "Owners of about 75% of the total outstanding amount of 13 series of external government bonds were voted in favor of changes in the condition of issue.

Due to the changes made, the maturity of all 13 series of sovereign Eurobonds will continue for 2 years," the Ministry of Finance said. Investors of Ukrainian securities agreed to the deferral in the payment of Ukraine for two years there were explained there: a positive vote for changes indicates the desire to support Ukraine, as well as to reduce the potential negative effect of these instruments on the economy of Ukraine for post -war growth.

For a country that is experiencing economic shock as a result of Russia's aggression, getting a deferral in external debt payments is a very important step. However, restructuring can lead to default ratings, as previously told the focus of the NBU Council Member Vitaliy Shapran. And already on August 12, agencies reduced Ukraine ratings in foreign currency to the selective and limited default, respectively.

"Given the declared conditions of restructuring and in accordance with our criteria, we consider the agreement as a problematic and equivalent default," - said in S&P, which reduced Ukraine's foreign currency rating to "CC/C" to "SD/SD". Fitch has reduced the rating from "C" to "Rd" as it decided the deferral of payments on the Eurobonds to complete the service of the problem debt.

The experts surveyed by focus are convinced that the country's reduction in the country does not affect anything because it was a predicted event. "In fact, these agencies' decisions do not affect anything - it is simply a statement of fact, as often with rating agencies," says financial markets analyst Ivan Uglynitsa. "This is fundamentally not affected. What Ukraine will delay payments for external debts is known for a long time. This is already depicted in the price .

This is a well -expected event that all creditors that are laid down in economic forecasts and evaluations of Ukraine's development, ”comments CASE Ukraine associated Ukraine Eugene Dubogriz. Even Ukraine did not refuse debts. NBU member Vitaliy Shapran says that in case of reducing the ratings of the agency simply state that the payment has not taken place, they are obliged to do it on their scale and on the requirements of the rules of rating.

"But let's be honest : Defalt, say, in Ecuador and in Ukraine-these are completely different defaults, they are perceived differently by the investor. It is one thing when the government just gathered and decided not to pay, because they were overcome, and a completely different matter when the war is disrupting government plans and there are all objective circumstances to postpone payments.

Most foreign investors with whom I communicate believe that the default of bonds of external government debt is an objective necessity, and the blame for this event should be laid on the Russian Federation, " - said Vitaliy Shapran.

Experts say that the default of the Russian Federation is a consequence of sanctions, then As a default of Ukraine is, in fact, a small pause before performing all obligations due to economic problems due to aggression Russian default Bloomberg calls Russia "Economic and Political.

" "Given the losses already caused by the economy and markets, default in Russia is still largely symbolic and little means for Russians who are experiencing double -digit inflation and the worst economic downturn for last years. But, with all that, it is a gloomy marker of rapid transformation of the country into an economic, financial and political rogue, " - said in the article of the agency. Therefore, there are no losses here for us.

What is happening now with external debts is just a legal recognition of reality for half a year. Moreover, we won the reputation when in the first months of the war continued to pay interest on Eurobonds. Plus, we return the interest on the IMF loans. For Russia, on the contrary, the default became a shock. Unexpected event - they did not expect that sanctions due to aggression will be so rigid that they would not be allowed to pay for debts, " - said Eugene Dubogriz.

In Russia, her default means lack External markets that will end positively for the country and its reputation. He believes that defaults against two countries are different scenarios. And the default of the country under sanctions, "says the expert. And adds that in the future the ratings of Ukraine will increase international agencies again, at least when the country begins to pay for debts.

Expert Ivan Uglynitsa also believes that it is impossible to compare the defaults of countries, so many differences in them . "I would not say that these defaults can be compared and is it worth doing? Moreover, against the backdrop of defaults of other countries where there is no war and new defaults - for example, Pakistan or Egypt, or other countries, " - notes.

What it was until February 2022, and in the case of Ukraine it is simply a small pause before the markets become available for Ukraine. He also believes that after the transfer of payments on the Ukrainian State Defense elevated. Although it is likely that the war is over, or the EU will approve the special law that Russian frozen assets will be sent for the restoration of Ukraine, sovereign ratings of Ukraine will be left at fairly low levels.